Chinese mining giant Canaan doubles profits despite the blanket crypto ban

Canaan profits soar in 2022 despite China's crackdown on crypto as well as the effects of the pandemic

By Shashank Bhardwaj

Image: Shutterstock

China has been pushing down on crypto this year, but Chinese miner manufacturer Canaan is facing no problems and continues to grow. According to their announcement, they have experienced a 117 percent increase in gross profit from the same period of 2021. Their Q2 profits amounted to 930 million renminbi (RMB), or approximately $139 million. The organisation’s Q2 net income was 608 million RMB, (or $91 million), a marked 149 percent jump from 425 million RMB in the same period last year.

Despite the impressive numbers, the CEO Nangeng Zhang said that the second quarter of 2022 has been a difficult period due to the tumbling crypto prices and the overall negative sentiments in the market. Amongst these struggles, he also noted, “The COVID-19 containment lockdown in key cities in China also brought severe disruptions to our daily operations and demand for our AI chips.”

The company is, however, showing no signs of slowing down and reportedly working on expanding their global presence, starting with establishing international headquarters in Singapore. They are also working towards scaling their mining business to generate more BTC with a better power supply.

In June, it was reported that Canaan holds 346.84 BTC, worth around $8.1 million. Zhang remarked, “We are fully aware of the downward pressure from the Bitcoin price since the last fourth quarter and expect it to bring prolonged headwinds to our performance in the coming quarters. Nevertheless, we believe in the unique value of Bitcoin and its long-term prospects.”

The Chief Financial Officer, James Jin Cheng, also seems to be on the same page that Canaan is bound to run into difficulties with the overall state of the market as well as the uncertainties brought on by the pandemic and the geopolitical environment. He says, “As the Bitcoin price further decreased in the second quarter, we responsively lowered our product price for spot sales to shoulder the pressure with our clients. [...] We expect the gross margin to decrease dramatically in the second half of this year.”

People are calling it the ‘crypto winter’ and the Chinese investors and companies would face the brunt of this since China’s blanket ban on crypto operations in September 2021 complicates things even further. Although this “great Chinese crypto ban” has forced many companies out of business or fleeing to set bases in other countries, China still stands as the second-largest Bitcoin mining country in January 2022. China hosts 21 percent of the global Bitcoin hash rate, only overtaken by the United States which produces 38 percent.

Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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